Chris Linder could not be more wrong in saying that state banks are part of the development problem. As anyone who seriously looks at development experience with an open mind knows quite well state banks have been quite critical to virtually all examples of rapid development. All of the post-war success stories used state development banks to successfully reconstruct (West Germany, Italy, Austria) and then so did the late developing countries in order to develop and rapidly grow and catch-up with 'the west'; some very successfully (Taiwan, South Korea, Thailand, China, Brazil, Vietnam) and some less so (as in India). The important thing to remember is that there are no examples of countries successfully developing WITHOUT the use of state development banks (and also directed credit, but thats another issue). I suggest Mr Linder checks out work by Ha-Joon Chang, Robert Wade, Lance Taylor, and also the work by the late Alice Amsden, especially this brilliant book which shows state development banks were crucial to the rise of the rest....
Amsden, A. (2001): The Rise of 'The Rest': Challenges to the West from Late-Industrialising Economies. Oxford.
Posted by: milfordbateman@yahoo.com
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